Former Goldman Sachs CEO Lloyd Blankfein on Why He Doesn't Tweet

which at the time was you know, one of those scandals.

it's just background noise. I'm having a conversation in my life with people like you know, hanging around with Sometimes in business it is not continued to be rude that if you're talking to somebody, you're not looking at them but looking at a screen or a phone or something like that. That's that's kind of okay. So it's like work Joe, so trade doing that. When somebody says what percentage of your time? Your time, it's like listening to music.

You can listen to music while you're doing something else, so it adds up to more than one hundred percent.

bankrupt because you'd be wrong for all this time. So everybody is given how the markets have moved sort of consistently for a very long time. I could tell you what everybody is kind of in, and of course I could tell you who's getting hurt at any given part when it gets upset for a day. But I'm in

probably things that wouldn't surprise you. But maybe the biggest surprise is that I'm all in, you know, so like I'm always one hundred percent in equities, now risk assets, that's what you say, risk risky assets.

and Steven Nutch and all ex Goldman. So I think we had had enough of that, and I certainly didn't want I didn't want to like add myself to the list at that point, and so kind of drifted on. Then I drifted through COVID, and I say, you know, I kind of like this, you know, not sending an alarm clock in the morning and Saturday afternoon, having lunch with people, and not having to go to the airport on a Saturday afternoon so I could get to Beijing first thing

Monday morning. And so it's easy to get used to sloth.

left on my own steam, and I quit tweeting. I still tweet very occasionally, but I mostly quit tweeting before I got canceled, which is very unreal impressive because most people quit after they most people most people get quit, they don't quit on their own.

kind of liked it. And the problem is you get a good reaction something, you know, good reaction, and then you start to feel clever, and when you start to feel clever, that's when you're going to get killed because then you think, gee, this is irresistible. And then somebody might say, well, they're not going to like that. And I said, how can I resist? It's so clever? And so guess what, I found it resistible? So I stopped impresent.

And I remember when the plane would take off and you wouldn't go directly go to switch you know, going the end, people start applauding the plane lifted off. You couldn't imagine Russia being normal, like a place to do business. Then in the go go years after the fall of the Iron Curtain, you'd go there and it was like the what it was capitalism on steroids, and you thought that that was going to endure, and now you know it reversed again. Same thing with China, when you know,

we invested a lot of time. I personally invested a lot of time and effort, and in a your brother, we still have a big business in China, but it's you know, as imagine I've strained now it's very hard to do business. We had a lot of joint ventures that can't be done because it's a Chinese you know, too much of a Chinese association for it. But when I started, you couldn't have gone. Then for a long time you thought we were growing into each other, and then you know, now we hit a speed up. The

point is there are cycles to everything. It's not a question of something being blipped. Everything is a blip and everything gets a little bit undone. I think I would have said, and I still believe. I think the tendency is for things to improve, to get better. You know what happened what you know, globalization. It's not just the rivalries or the polarization of the East and the West.

The global financial crisis contributed to that because what happened was, you know, there was the central banks of the world and the governments of the world were coordinating their policies. And then when it hit the fan. In a digital world where nothing really moves except electrons and digital notations, it suddenly became important to each government where an institution's

assets were. If the assets were in the United The US Central Bank, the FED was lending money, for example, to the US affiliate of Deutsche Bank, and they were lending to Deutsche Bank multiples of the assets that Deutsche Bank had subject to the US because most of their assets were Germany. All of a sudden, people realize that, and it became very nineteenth century. It became where are the assets like physically, as if they were really physical

assets as opposed to but assets have a location. And they discovered that similarly, I mean you can go case by data point by data point COVID. It made a real difference who where they were manufacturing the vaccines for who got them first or the PPE and all this other stuff, and so now of course that's been you know, emphasized now because now it's you know, America first, and I'm sure, you know, I don't speak German, but i'm sure in Germany it's Germany first, and it's like that.

But that also will evolve, and that's that cycle will go again, because you know, does the world It turns out when when we started to globalize, you say, does Europe need fourteen battery makers? Shouldn't they just have three for the whole thing? And then it became very important that you had a battery make if it's strategic in your own country, and supply chains another things that make people less global.

have to sort out the banking system. Now you can want to bring them up and trial and kill them. You do whatever you want to do it. But at the end of the day, governments don't lend money to people, and central banks don't lend money to people. The transmission for economic policy and for monetary policy and getting money out into the public is the banking system. And if the banks are distressed, if you gave them money, they husband that money to increase their reserves so they could

be solvent. And in fact they have to do that, the regulation requires that they do that. And so it's very very hard to get money and resources and get people going and provide that stimulus to the general public with a distressed banking system, which is why the big recession was a big recession because it was very hard

to get over. Today, if we had bad employment, if growth went down, and we weren't particular worried about inflation, it'd be no problem to stimulate the economy, you take rates down, fiscal spending, the banks are in good shape. If the banks are in bad shape, that's very hard to do.

Helm or Guythner for that matter. What's your sense of how the current administration would react to something like that.

But my guess, and everyone's always asking it, I think there was like like a fifteen seventy fifteen to twenty percent chance that it could have really have gone off the rails and that we really would have had a crisis that would have taken a very long time, because what happens is in a kind of crisis where there's credit, a credit crisis, which is what it was, a credit crisis. We owe each other money. There's a daisy chain of money.

You bought something from him, he bought it from me, and that goes around in a credit where you don't know the sovereignty of your counterpart. You're not going to pay me until I pay you, so you're waiting. But I can't pay him unless I get my money from you. So I'm stuck and he's stuck, and he's stuck and he's stuck. So the system is frozen. You need somebody with a big back sheet, and it's usually a government to say we will for this short term cover it, so all of you will get paid. Now go in.

Generally you don't have to use the money. The money comes back because it's just insecurity that drives that, and I think the government would have to do that. They'd hate it, but would have to do that. And by the way, is that going to happen again? You know? Fortunately, you know it was a once in eighty year storm. But you know, I don't think I'm going to see the next one. But you know these things, You know, when you get through a crisis like that, everyone says,

let's ensure we never have another crisis again. And you know how you can do that. You can turn yourself into a treasury bill. You can turn you and even a treasure bill has risk because you're taking a risk with the value that the value of the dollar doesn't get inflated away and retains its purchasing power. If you take zero out risk, you will have zero progress and zero growth. And so what happens is and again it's a cycle to things. You come out of that and

you say never never, never never. You implement very very tough protocols and regulations and things, and over time you start to think, you know, it'll be a lot growth here, if there was more here's a good word, it'd be a lot growth here. It wouldn't be great if banks did mortgages again, it wouldn't it be great if you didn't have to put down thirty percent to get them

mary and blah blah blah. And it relaxes that time, memories start to dim and it gets to a point and maybe it gets past the point where it should and the cycle resumes, And you say, how could that have happened again so soon? It's only been eighty.

Even the people who you think are in the inside who should know better, they're also surprised too. I don't know, you know, the private credit and other private assets. I think they're generally, of course, by by definition they don't trade publicly, so they're less liquid and probably maybe sometimes illiquid, and consequently very hard to price. So when you have your asset and you look at your account and you own this and you get a mark to market, is

it reliable? Is it where you can sell it? There are a lot of private assets on people's balance yet that take private equity. We've just gone through a period of time where we've had record equity prices in a world that's a wash with liquidity, the best financing market, and they're still in an accumulation of assets on the balance sheet of companies that are in the business of selling the assets they invest in. Yet it hasn't happened, so maybe they're not marked for sale really to be done,

So that could be an issue. In general, I'd say one of the things now there's nothing wrong with private credit, private asset, private equity, as long as the returns, the expected returns, compensate you for the ill liquidity, and the people you're communicating to understand the illiquidity and the consequence of the illiquity to them, that has to be made clear.

I'm not always sure that it is, and certainly if it goes wrong, no one will remember having been told that, so I would say, and taking account of that, I would say, a particular private asset, whether it's credit or private equity, is no different in your hand, in an individual's hands, or an institution hand, but the consequence of it going badly is much worse if it's individual hands.

Why is that because, I would say, the official sector can watch institutions, very high net worth individuals lose money and not be particularly perturbed about that. But when it goes to consumers and retails other names for which are citizens and taxpayers and voters the public, the official sector

gets very perturbed. So one of the comments I made is without applying whether these are good, or whether the marks are correct, or whether the illiquidity premium you're getting is adequate or not, I just said, you know, be careful some of these firms. People wh run these firms have fabulous lives, do very well for a long time, have boats and everything, and great hat in multiple houses.

Have some trepidation about extending your business from institutions into four to one k's people ets, people who are less than the highest net worth individuals, and by the way, adjacent insurance companies, which is sort of one order away from individuals, because insurance companies ensure real people and need to be solvent. So that's something that I'd say is happening to It's not just the nature of the assets but where some of these assets are being put now.

commitments outstanding. That was sort of eye opening at the time because we had commitments to make loans, which, believe me, at the time, you know, when things are going crazy, it's the last thing you want to do is do then, So that we had to manage those risks. So you know, what do we do. We make sure in the lead up to the press. You know, once something is happening, you know, it's pretty late to start doing stuff when everybody's trying to get out of the same stuff. We

sort of always knew it. We we had a you know, a real abiding respect for reality. So we would always try to mark stuff to market and very assigiously. We had a separate group. Half the firm would take risk and the half would market would do the marks, and sometimes the risk takers would disagree and say, oh, that mark is too concertive. I think this s assets worth more, and we'd say, fine, I'm sure you're right. Go sell something and prove that your mark is better than their market,

that it's worth more. We would do that religious I mean, we were firm on that. And then when things started to get bad, when people couldn't sell things for where they thought it was, we started marking it lower. And when that started to happen, we didn't necessarily think we didn't have a view that was going to happen. We went into risk management mode. So it didn't matter whether it was bullish or bearish. Stuff is happening, and so we just put out the word stay close to home.

So we have to take risk. People come to us to buy from them what they want to sell, to sell to them what they want to buy. We get caught in risk taking situations from our general activities for our clients. But whenever we were veering too much in one direction, getting too long and getting too short, we would stop until there was another side to it and we would source the other side. So, I mean, the key for us was not reacting crazily when it started

to go badly. But what we did in the lead up. The other thing we did when we couldn't get other sides to things. We bought insurance in the market, famously from other banks for very little, because it was worth very low. We bought insurance on triple A companies that weren't turned out not to be triple A. We didn't do that because they thought that, aha, these really aren't triple A companies. Oh no, we thought they were triple A companies. But we just didn't want to have too

much exposure to anything at that point. And the good thing about the fact that it doesn't, you know, it doesn't look like you need the insurance is that the people who sell you the insurance don't charge you very much because they think it's free money. And by the way, we thought we were wasting money and it turned out not. But that's just a discipline that you have to have all the time. You can't have that discipline when it

looks like things are going bad. You have to have those things at that discipline when things are looking good.

be stimulated by something that's not right. The fact of the matter is, you know, you could be hooked up and be living in Warsaw, which by the way, is a financial community, and then and there's a lot of tech people in Warsaw, but people who are smart and ambitious want to be around other people who smart.

very expensive place to die. I don't know why I'm thinking those dark thoughts now, but because we New York has a to state tax, and even California doesn't. But so for tax reasons and for reasons of sunshine, people going there. But it's not New York. It's still New York.

time it was a fat finger. Like I remember one famous incident where somebody, Now why anybody would do this, but they were they were testing some software and in the software they were you know it.

was like stupid, somebody put in and do it. The problem with technology is you want to check things over and over again. But if you build in nine checks, nobody takes it seriously because I know eight other people are gonna check it. It doesn't even solve the problem to build in more layers of checking, because it's mind I mean to check something where there's not a problem except once every two years. Who's gonna Who's gonna sleep through that? No, the world, I've said, the world is

getting dangerous a way. When I started out in a trading room, every was said out loud. Somebody would say bye, and you know people, and it was all noy. Today, you go into a trading room and you're communicating digitally with the person sitting next to you. In the old days, you'd shout across the room and if somebody said something wrong, a buy instead of a cell or the wrong number or the wrong price, the whole room would stop and everybody would look at that person. You would hear it.

Now nobody hears anything, and if they did, they wouldn't know because no one could into it anything because a lot of algorithms and a lot of technology trading. So I would say with technology, technology is leverage, and leverage is good when it's going the right way, and leverage is bad when it's going the wrong way. And by

the way, that's in life. And you know, if you had an you know prior to the age we're in today where you know where the nuclear age where proliferating and more atomic power and things like that, even for good uses. What could an industrial accident be? They think the biggest industrial accident was Bapal Union car buy eight or nine thousand, very tragic, horrible situation. Liability for Union

Carbide destroyed the company. But I think eight or nine thousand people died in Fukushima, the Japanese when they had the tsunami and effected. If the wind had been going in a different direction, you would have had millions of people die. That's technology and progress for you. So not only is their leverage, the ability to into it and

see what the problem is is less. So I just postulated that, you know, we have all these safeguards, all these things, all these state actors malevolently trying to cause Well, yes, but you know something, I'm also worried about the mistake, the fat finger, the unintentional thing, because how do you build it. It's hard to build in safeguards because the more safeguards that you build, the more repose and relaxed

you get about each one of them. And nobody can find out that no one's doing there, no one's doing their job.

I'm sure the people who at least until they start to walk better than they walk today, the people who garden for me, and the massage therapists and the personal trainers are safe. Well man, maybe not even personal trainers, but everything shy of that is just some you know. And then we're gonna just have to and then there'll be more jobs that leverage whatever stage of progress we're at. You know, once upon a time, not that long ago, beginning of the twentieth century, more than half the country

was involved in agriculture. Guess what. We absorb those people, But it's not without stresses and strains. Not everybody who's not everybody who's a software programmer is going to be a pilates teacher, and so there'll be some stress and dislocation.

But who knows the way society is going to evolve maybe you know, remember, you know, from school, you read the Marxist ideal where everybody's gonna only have to work four days a week, Marxist ideology, And who knows, maybe they'll be Once upon a time there was a six day work week even on Wall Street, people came and Saturday that's when they did all the back office stuff. And maybe we go to a three day work week. Maybe we work Once upon a time it was a

ten hour work day. Now it's an eight hour day. Maybe it goes to five. Maybe everybody just works less and moans to how I have and that they have to work four hours that day. So, by the way, it doesn't matter whether we like it or not. It's going to happen. So you could spend a lot of time mourning for it and regretting it, but it's going to happen. But the idea that machine's going to do a lot of stuff that we do when I started, when I started on Wall Street, you know the tape

and people don't know. You know, ticker tape? What is that ticker tape? Those are the threads that came out. Well, once upon a time, that's how you communicated. You communicated tickers and you couldn't get it back. So you had approofreated very carefully, and you had to make sure that the confirmation you were sending to the Central Bank of China Beijing didn't go to the Central Bank of China. Taiwan and you kill yourself. So I spent three hours

a day doing that. Nobody spends any time doing that. When I practice law, you used to have to go and look at every case that ever mentioned a case you relied on lest it be have been overruled or criticized. I spent days doing that. No one spends minutes doing that today. That's progress. It's going to happen, and I welcome that, particularly since I've already made my money and I'm unemployed.

good chunk of my salary disappears in taxes. We had a good year last year, so we got bonuses. Recently, a good chunk immediately disappeared. I'm not going to like.

Thank goodness. I'm glad they want I'm glad there ares. I'm glad they work. But to just extrapolate the points you're making, an economic system has to do a couple of things, and it has to do a lot of things, but two major things. It has to create wealth, and then it has to allocate that wealth thus created according to the values of society. I think our cap our system has done a pretty good job creating wealth. Nobody can get out there and figure out what the new

thing is. And nobody's more ruthless about taking things that fail, getting rid of them and repurposing them and getting them off the balance sheet and building you know, plowing over that airport that no one lands at and making it turn it into a walmart. Nobody's better at doing that. But where we have done poorly is the allocation of it, the allocation of the proceeds. And that's of course where a lot of the polarization that we're living through now.

And you know, so a variety of things, you know, you have to you know, obviously progressive taxation is one of them. Just building the safety net so things are free and available to everything that previously you would have had to pay for. So public housing has air conditioning. Now, public housing when I grew up didn't have air conditioning. So making life better at a base minimum. But that's the task, and that's the challenge that we have to do to allocate based upon values in a way that

doesn't dis incentivizing people from working. So at some level of taxation, you may be disincentivized from working. Poor Elne Musk went back to the shareholders and said, you know, I'm only worth five hundred billion dollars because you took away my options from the Tesla thing. Give them back or else I'm not going to work for Tesla anymore. So there and so he got it back, and so now he's got that extra stimulus of billions five hundred and one to seven hundred and forty nine. So people

do what they do. But by the way, I'm glad he's working, and I'm glady's one of mine. And I still can't believe those rocket ships can land in Tanis so beautifully, and nobody else seems to be able to do it. So bravo, keep on going. I'll give you an extra couple of dollars if it'll help you.

public market stuff. Then you have a liquidity event where people try to sell and they get gated and it's not working out so well, and so that goes. I don't know, I think, you know, the one of the things that AI can't really do is they can't take risk. They could tell you, in my opinion, based upon my you know, working this algorithm against this huge database, how those dice would have rolled and what you know, what

percentages when you will do these simulations and stuff. But at the end of the day, you have to still apply judgment. And if we were sitting there having a conversation one hundred years ago, by the way, people one

hundred years from now are going to be around. I don't know if they'll be sitting on this chair or floating above ground, but they're going to be talking about how primitive we were thinking that we're you know, we're thinking sitting here, thinking how cool we are today and how everything's up to date in Kansas City and everything is good and and and and novel. But all this is going to look stupid. Could you imagine they carry their cell phones? Ha ha ha ha, or could you

imagine Yeah? I mean, but they'll but some things as general principles, Oh, we are going to persist. I think they'll be create, create, you know, still, people going to still write music and natural you know, people will fill in the gaps. If you plug in a song, it'll publish another song like that. But will it do something radically innovative, I don't know. It's possible. Again, brains are lines of code. Maybe they'll just have more lines of code and eventually do it. But I do think certain

things like willingness to take risk, judgment. I've known so many brilliant people, and I've known so many people with good judgment. It's amazing how infrequently those those come together at the same person at the same time.

a millisecond game. If you have your computers a half a block closer to the main computers of the platform, you win everything because in the even moving at the speed of like getting there ahead is so that's already been done. But in a firm answer, maybe I'm interping your question a little bit. Differently, These things happen at different times. So sometimes it's the people who put deals together.

Sometimes it's the people who finance deals. Sometimes the biggest, coolest kids on the block, or the risk managers who prevent the firm from discombobulation and manage risk so successfully so the other people could do their jobs. In our organization, one of the things that I think has helped Goldman sacod Agent is that we still the firm is still run like it's twenty six years since it was a

private partnership. Half of my tenures is a private in a private partnership, was in a company, but we ran the firm as a partnership. Everybody in the firm got paid largely on based on how the firm as a whole did, not just their narrow area. People who did a good job and it wasn't their turn, or the market was working the way that they couldn't make money, got compensated well for doing a good job, even if

the opportunity wasn't there. And if it was an easy market to make money in and they weren't doing a good job and didn't do well, it didn't matter that they did well, you know. In other words, we looked at the firm as a whole. People had to look out for each other. Place was run as a partnership.

That's very helpful. If you have a firm full of people who are owners, everyone is looking around what the people next to them are doing, and if they see bad behavior, if something's not right, they demand information about the whole firm, not just their narrow area, and they give you opinions even when you don't want to hear it. And guess what, it's a little bit slower and harder to run that organization. But I think you get a better you get a better outcome.

hundred people were supposed to share. But it was right in front of me, and everybody was walking by it like they were walking Remember the movie two thousand and one of Space odyesstly, remember the obelist the obelisk, and everyone's doing this. Everybody was doing that. And I finally figured out how to use it. I put yellow pastins on it with my schedule and numbers that I had to look out for. In other words, I couldn't turn

I didn't know how to turn on the machine. But I was using it as a as a bulletin board. And then somebody calls up and he said, Lloyd phoned line so and so who is it Bloomberg? So I said, I'll call call him back and said, no, no, it's Bloomberg the person, not Bloomberg the company. And it was Michael Bloomberg. And he calls me and he called up and I get on the phone and he said, I noticed you had we noticed you haven't turned on your machine.

And I said, oh my god, where's the camera? I said, well, we could tell dig and I said and I said, well, and so you're calling me and he goes, oh, no, we do the way here. And I don't know if they do it today, but in early Bloomberg he had all the senior people in the organization. Every day they had to call five customers each one and call them and discuss. And I said, I said, you know, wow, I promise I'll turn on machine. Probably about two years later I figured out how to do it. But I'll

turn on the machine. But I said, isn't that a very in a few of your time, because here you are calling me and I wasn't a senior guys, And he goes, no, no, we learn a lot about the business. I've realized now that was a very stupid comment, because here I am, first of all, everybody on our floor knew that Mike had called, and that he cared. The guy whose name was on the door cared about whether we're using or not, and not only laterally across that

dimension everybody knew. But here I am, thirty five years later telling the story, and so now you're hearing about it. That was a very good use of three minutes of Michael Bloomberg, that I'm telling that story about his care and then so to me, I know how Bloomberg got built, and so that was a lesson I learned. So I told that story and then I said, you know, Mike, this book is so good and has so many good stories that that one didn't even make it in the book.

It's on the cutting room floor. If it sells well, maybe volume two or volume three.